40 - Required:Usingthefollowinginformation,present:

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Required: Using the following information, present: i. The Absorption Costing Income Statement in proper format. ii. The Direct/Variable Costing Income Statement in proper format. Notes i. Please also note that this problem assumes that finished goods inventory at the beginning of year t is usually valued at year t-1 costs and the finished goods inventory at the end of year t is usually valued at year t costs. Hence, for example, finished goods inventory at the beginning of year 2 is valued at the relevant year 1 costs and the finished goods inventory at the end of year 2 is valued at the relevant year 2 costs. ii. Please assume that the cost structure for year 0 is identical to that for year 1. Hence, the beginning inventory for year 1 is valued at year 1 costs. CA 9-2b - Absorption vs. Variable Costing - Holmes Corporation - October 11, 2007.xls Year 1 Year 2 Year 3 Sales (units) 100 90 110 Production (units) 95 110 85 Beginning inventory (units) 30 25 45 Ending inventory (units) 25 45 20 Static budget (units) 100 120 80 Variable cost per unit: Materials $ 1.50 $ 1.75 $ 1.60 Labor $ 2.00 $ 2.05 $ 2.10 Variable overhead $ 1.50 $ 1.45 $ 1.65 Variable selling $ 0.50 $ 0.60 $ 0.70 Budgeted fixed overhead $ 300.00 $ 305.00 $ 310.00
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40 - Required:Usingthefollowinginformation,present:

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